Fruit of the Loom would incur huge financial penalties if it closed down or relocated its Irish operations. The clothing manufacturer has received up to £24 million in grants from the Government since 1987 and would have received substantial British grants towards developing its Derry plants. Much of this money would have to be repaid, if it were to pull out in the short term, while redundancy costs for its 3,500 workers would also be sizeable.

Industry sources have indicated that the company would be liable to repay around £12 million to the Government, if it were to relocate in the coming years. Over half of this amount relates to grants paid in 1994, which it is liable for until 2004.

The group also qualifies to pay the lowest rate of corporation tax - 10 per cent - available to companies in the manufacturing sector.

While all European operations are understood to have incurred cumulative losses of $29 million (£20 million) over the past eight years, some of which would be accounted for by the Irish operations, this adverse financial position can yield tax benefits on any future Irish earnings.

The Irish businesses in Donegal and Derry are integrated, in so far as the Derry operations spin the yarn which is used in the manufacturing process in Donegal. This structure is seen as a safeguard for the continuation of these businesses. Periodically however, there has been speculation that the company could move some of the lower value productions, mainly of T-shirts, to a cheaper location, while retaining the higher yielding sweatshirt manufacturing operations in Ireland.

This has been the trend in Fruit of the Loom's US operations, where much of its manufacturing production has been transferred to the Caribbean, where wage costs are relatively low.

Indeed the comparative operating costs gap between the Irish factories and those which the Irish management controls in Morocco are quite substantial, with a basic hourly rate of around £3 plus bonuses paid to most workers in the Irish clothing industry compared with $1 an hour in Morocco.

The group is operating in a particularly difficult sector at the moment, where falling margins and cost pressures worldwide are constantly eating into its profits.

The planned management reshuffle is part of a reorganisation of its European operations which is also expected to closely examine its cost structure.